Tuesday, October 16, 2012

The Anatomy Of A Deal

It's going to be quite a while before that smile leaves the face of NASCAR Chairman Brian France. Amid a rapidly changing sports TV market desperate for product, France struck the motherload.

Here is the full announcement with all the available details provided by both NASCAR and FOX about the new multi-year agreement between the two parties. Read it carefully, as this agreement not only covers the future of the Sprint and Camping World Truck Series, it also previews the changes coming as SPEED TV becomes the FOX Sports 1 cable sports network.

With two full seasons left on their current television contract, NASCAR and FOX Sports Media Group (FSMG) announced today (Monday) an extensive new eight-year, multiplatform media rights agreement that ensures FSMG’s broadcast of NASCAR racing through 2022.

Under terms of the new agreement, FSMG also significantly increases its digital rights to include “TV Everywhere” live race streaming of its portion of the season for the first time ever beginning in 2013.

“NASCAR has been in very good hands and has enjoyed tremendous success the last 12 years in large part because of our fantastic partnership with FOX and FOX Sports Media Group,” said NASCAR Chairman and CEO Brian France. “We are thrilled to be able to extend our relationship in such a significant way for our track partners, race teams, and most importantly, our millions of loyal and passionate fans. This extension with FOX Sports Media Group helps position the sport for future growth as NASCAR continues to be an anchor with one of the world’s largest and most influential media companies.”

As part of the new agreement, which takes effect in 2015, FSMG retains the television rights to 13 consecutive NASCAR Sprint Cup Series points races beginning each year with the prestigious Daytona 500. In addition, FSMG retains the rights to the NASCAR Sprint All-Star Race, the Daytona Shootout, the Duel at Daytona, the entire NASCAR Camping World Truck Series season and practice and qualifying for both the NASCAR Sprint Cup Series and the NASCAR Camping World Truck Series races that FSMG broadcasts.

“We’re extremely happy to have worked closely with Brian and his team at NASCAR over the last few months to expand and extend our relationship for what is without question the most popular motorsport in the country,” said FSMG Co-Presidents and CEOs Eric Shanks and Randy Freer. “NASCAR has been a staple at FOX for more than a decade and we consider it one of the signature sports we cover. With our commitment renewed, we look forward to presenting NASCAR thoroughly, professionally and creatively for many years to come.”

On the digital front, FSMG gains “TV Everywhere” rights starting next season to live stream all FSMG races, along with pre- and post-race coverage, race highlights and in-progress race highlights to events it televises. This portion of the deal was made possible by NASCAR’s reacquisition of operational, business and editorial control of its digital platform, a move that takes effect on Jan. 1, 2013.

“NASCAR fans’ demand and desire for NASCAR content stretches across all platforms and distribution channels,” France said. “As we’ve done with this FSMG extension, we will continue to take the appropriate measures to ensure our fans have access to the sport wherever they are and through all available devices. NASCAR is one of the most accessible sports in the world and this new deal builds upon that in a very significant way.”

FSMG’s new and expanded television and digital media rights agreement with NASCAR includes, but is not limited to:

- An eight-year term from 2015 to 2022. The current FSMG/NASCAR rights agreement began in 2006 and runs through 2014

- Right to televise all practice and qualifying sessions for FSMG races

- Ability to re-telecast races on a FOX network and via video-on-demand (VOD) for 24 hours

- Right to ancillary programming including, but not limited to, a nightly NASCAR news and information show as well as weekend at-track shows

- Right to NASCAR branded pre- and post-race shows

- Extensive digital rights beginning in 2013, including:

- TV Everywhere – live digital distribution of all races FSMG has rights to broadcast

- Pre- and post-race coverage

- Race highlights

- In-progress race highlights

- Replays of FOX-televised races

For this agreement, FOX will pay $300 million annually for eight years. That would be a total of $2.4 billion. This is an increase of 33% over the existing contract, but there are some items to note.

While FOX describes the fact that it can offer streaming of races for digital devices in the new agreement, media reporter Joe Flint of the LA Times notes that NASCAR fans will have to be a subscriber of a pay-TV provider to access that content. There is little doubt that provider will be the new FOX Sports 1 network.

As regular readers of this blog know, there is no love lost at the moment between NASCAR and Turner Sports. A nasty fight over digital issues saw NASCAR wind-up spending tens of millions of dollars to buy back its own online rights. NASCAR likes to cash checks, not write them.

The new FOX agreement paves the way for FOX to possibly buy the rights to the races currently in the TNT package and present that "summer six pack" on FOX Sports 1. Remember, those races are already being seen on a cable TV network. In theory, it would just be a channel change for fans. In reality, NASCAR would love it.

Finally, the clear language in the agreement surrounding practice and qualifying sessions speaks to those races being televised by FOX. As we mentioned in past weeks, TNT has never carried those sessions and ESPN has been hit and miss at best for that network's races.

It would be improbable to believe that FOX would want a branded network like FOX Sports 1 to carry the practice and qualifying sessions for races on TNT and ESPN. Under the SPEED banner, it made sense as the network was dedicated to motorsports in theory. That is about to change.

Finally, what becomes of shows like RaceDay and Victory Lane? In the New World Order, RaceDay would spend two hours promoting a race airing on TNT or ESPN once the FOX portion of the season is done. Tough to believe FOX Sports 1 would actively promote a Sprint Cup Series race running against NFL football on the FOX Broadcast Network.

It's going to be interesting to watch all this shake out, but one thing is clear. FOX has moved into the national cable sports business in a big way and used NASCAR to bring a large body of content to it's new network.

Despite it's ongoing issues, NASCAR struck paydirt with FOX. ESPN and TNT chose to pass on these early negotiations and will not make their intentions known until several months into the 2013 season.

We welcome your opinion on this topic. Comments may be moderated prior to posting.

43 comments:

Anonymous
said...

To get access to "watch ESPN", you have to log in with your cable or dish provider credentials. I am guessing that Fox Sports 1 will require the same. The online marketing, pop-up windows and commercial drop-ins are probably going to be insane. But, I am betting that's where FOX will make up the added millions in fees.

I am thinking that this might actually be a GOOD thing for us fans. If FOX wants to play with the big boys with their Fox Sports One channel, they might have to put on a legitimate show. CBS is all professional with it's coverage of sports, NBC does the same and for the most part so does ABC. But Fox is always goofing around with NASCAR. Maybe they might have to grow up and put on a better show this time. Bring back the old Trackside. Bring back the classic coverage style they used to have in the early 2000's...

I sure hope they snag the rights to the TNT races. I also hope they utilize FX a lot more. Do you think that NBC Sports Network might be in the running for the Nationwide series? Or even a Velocity channel? Great website as always!

I see a lot of "right to" in that but not a lot of "have to". I wonder...if NASCAR Cup ratings continue to drop or Fox buys more lucrative programming, how much of this "right to" stuff gets shuffled to an online-only platform or gets dropped completely?

Overall, I must say that, judging by what is in the release, much of this deal is not only what NASCAR wants but very much needs. The only problem is that it probably ensures hyper-tight, hyper-goober coverage of 13 to 19 Cup races per year. Whether they are shown on Fox, Fox Sports 1, or an online platform, what good does it really do if NewsCorp continues to fail to show Cup racing in a perspective that brings forth its true excitement or find the stories that make boring races interesting?

I also ask, is Brian France willing to stop counting his money long enough to seriously focus on the on-track issues that are also hurting the televised product? Judging by what I have seen this century so far, I won't be holding my breath or expecting to have NASCAR return to my regular routine anytime soon.

Because SPEED was a stand-alone motorsports themed network. FOX Sports 1 is going to be a direct competitor to ESPN.

It made sense for SPEED to provide pre and post-race coverage for NASCAR races as part of the overall programming.

FS1 does not share that agenda in any way, shape or form. The decision is going to be whether blanket NASCAR coverage ends when the FOX races end or if it will continue through 2014 as originally contracted.

I pretty much agree with KoSoHo...especially on the 'hyper-goober' comment, lol.

The only thing I'd say about the 'promotional' aspect of Raceday is, on football coverage, they still 'promote' the games not on their network, especially big ones, by talking about them endlessly....not exactly the same thing, but in the neighborhood. I assume they figure promoting the sport in general is a good thing, so they all share in it--in the case of racing, just not at the same time of year. I have a feeling most of the networks involved see race fans as being a 'niche' group, even though many of us watch all kinds of other sports--I doubt they would see it as that big a threat to the NFL. That said, I wouldn't necessarily expect to see it on FoxSports1. I don't watch it anymore myself, but they could easily cut it down to an hour & make it more useful.

More concerned about practice/qualifying, but if they handled it online, that would be okay. The big losers here are going to be those without some kind of pay TV, but they are already in that situation now.

I assume that Fox Sports 1 on Dish will be in the same tier as Speed was, meaning it was not in the Top 120 package at all. So I hope none of the Cup races go to FS1, because I can't afford to upgrade to another package for 6 races. I've always wondered if Speed was on basic cable everywhere else.

Mr Editor -"We are thrilled to be able to extend our relationship in such a significant way for our track partners, race teams, and most importantly, our millions of loyal and passionate fans." - attributed to Brian France. EDITOR'S NOTE: Please note "millions of passionate and loyal fans" - listed last.This fan is backing closer to the departure door everyday and sad to admit it.Walter

The only good part is that the races (especially NCWTS) will be televised. But this overpay will make the current race telecast-slash-infomercials look like the Masters(R) as compared to the Frys.com Open.

It also looks like ESPN will be relegated back to the helipad for interviews. And I bet it will also destroy HotPass like ABC/NASCAR did Saturday night at Charlotte, giving us one-camera track coverage with blowhard PA voices instead of PRN.

As long as the check is good, the media partners may do as they please. If television continues to obscure the action on the track, the ratings will continue to decline.Daytona is unconcerned with attendance, as their money is in media content, not live performance. So in that respect the decline of NASCAR will continue unabated. Not good. As for me, I no longer plan around NASCAR racing and will not, until things change from the current status quo.

what happened to sky is falling and cart and horse theory? Mr Daly you got blasted big time on Moodys show on Monday basically calling you out as a NASCAR insider that was suddenly quiet after the announcement was released.(And still quiet except for facts in blog) Will there be some crow to be eaten?

Gee whiz - maybe NASCAR on TV will be ok. Big Time money from FOX that will filter to the tracks. Guess you didnt read Mike Joy's tweets yesterday that there is no indication that races will move to cable - only speculation fron NASCAR insiders like yourself.

On the other side there is no mention of SPEED - only Fox Media Group so I guess qualifying and such "could" wind up anywhere on the FOX networks or FOX online.

I think that FOX did put the cart BEHIND the horse and has their ducks in a row. Still not out of question for them to bid on the TNT races as this was only an extension of current contract.

All this deal means to me is that as usual, money talks and NASCAR rakes it in. If no one is in the stands, it’s not out of their pockets, if no one watches on TV, they’ve already been paid.

There isn’t much incentive for NASCAR or the other TV partners to change anything because of the “malcontents”. If we keep taking the garbage, why shouldn’t they keep dishing it out?

I watch less and less on TV and only renew tickets to tracks that I really enjoy. After the enduring the misery of the “race” on Saturday at Charlotte - in the heart of NASCAR country - that is one that I won’t be renewing for next year.

I do hope that this deal means good things for people like Steve Byrnes and others who work at Speed. It’s a shame that they’ve been caught up in all the corporate shuffle. In theory, it would seem that Fox will need good people to cover NASCAR, at least that’s what I hope it means.

I guess I’ll have to wait and see whether or not I’ll tune in – I agree there are too many unknowns in this announcement.

I think the success or failure of the Fox contract is dependent on Fox and NASCAR.

If NASCAR produces good racing and Fox actually shows it on TV with good talented people in the booth, their ratings will increase and they will be able to charge more for commercials which would increase profits and allow fewer of them.

However, If NASCAR continues to produce a poor racing product and FOX continues their poor coverage with the unbearable motormouths in the booth, the ratings will drop and they will have to sell the commercials at a discounted rate. To make up for that, they will have to show more commercials. That will cause the ratings to drop even more which will force them to discount the commercial rates even more which will make the ratings even lower and on and on and on until NASCAR has about the same standing on TV as professional wrestling.

Andy...I don't think it was ever on basic, but I think it was standard in some areas. When I told someone from the south back in...early 2000's, I think....that Speed was not even offered, *period* on our cable system, he thought I must be mistaken. We did not have FX either. But a short time later they added both, with SPEED going only to the digital tier. I dumped T-W and got a dish.

Moody and Pistone are part and parcel of the problem with NASCAR today. Instead of dealing with topics head-on, the spin is be positive about NASCAR or you are somehow against the sport.

I have written about countless topics over the last six years. In checking my posts on the potential FOX deal, you will find that my concern was the integrity of the sport in terms of continuing coverage for practice, qualifying and news.

My issue was and still is what happens to TV coverage after the FOX portion of the Cup Series coverage is done?

As you may know from the many media stories on the topic, NASCAR ratings and attendance are down due to a wide variety of factors.

To somehow try and suggest the dollars paid by FOX are due to good racing on the track is ludicrous. They need pro sports product now and did exactly the same thing (overpay) for MLB a short time ago. They have a new cable network to feed.

I had the pleasure of being a regular guest on Moody's show for several years until the word went out not to book me. We used to have a blast taking about the TV coverage and the many personalities involved.

It's not hard to understand someone trying to support the source of their paychecks. SiriusXM's NASCAR channel used to be fun, now it's just an endless agenda of marketing talking points and polite interviews for predetermined reasons.

NASCAR has shifted from being a television-driven company to one clearly centered around the marketing of the sport. How that gets fans back in the stands or more passing on the track is yet to be seen.

I agree with JD. During the FOX part of the season, I imagine we will have some variety of "blanket" coverage. Whether that is on FS1, FOX, FX, FUEL or online remains to be seen. But as we have also seen with this most recent contract is that TNT will not provide us with practice or qualifying. ESPN may give us infrequent looks at either or. SPEED was always there to pick up the slack the other two networks missed. But now with FS1 having such a sport focus and motorsports being pushed out the door, it is entirely fair to question what will happen.

Just because FOX threw a ton of cash doesn't mean that automatically it is GOOD for the sport or the fans. How they execute covering and portraying the sport is what really matters here. In recent years FOX has continued to cast the sport in a silly and not very serious tone. I absolutely expect this price to get passed down to ME, the consumer. Now tell me, how does that help me again? Sure, Brian France and everyone under the NASCAR umbrella will make hand over fist on this deal. And it will be nice to have some online content but the idea that it's going to be widely available or free is silly. Look at Hulu. FOX threw that out there for free, realized what they had, now charge for it. I expect the online content to be a pay service, I just hope it won't be THAT expensive. And hopefully there will be an option for limited advertisement.

Hopefully FOX will take it seriously and step their game up. Recent history as an indicator though, I don't feel too confident.

I had a feeling this was gonna be a huge pay day for NASCAR. Mr. France is nothing short of a wizard. And unfortunately it leaves some fans in the dust. Moving practices and qualifying online(which I think will be utilized more for the trucks than Cup)will be hit or miss with the issue of accessibility. I've already found out the hard way that WatchESPN doesn't particularly like Xfinity (Not Compatible) so this once again may be a problem, given Comcast and Newscorp being fierce rivals. However I am looking forward to the new NASCAR.com being essentially a one stop shop for all aspects of the sport. If only they'd move the regional series there then I'd really be pleased. Over all how this plays out over the decade to come will be quite intriguing. But yet it may alienate even more fans. For me this is essentially it, if this project fails and I myself am disappointed then this lifelong fan has a serious hole to fill on his weekends. I hope for the absolute best.

I noticed something interesting in how the deal was written up on Thatsracin.com. The Daytona 500 was the only one that FOX said would air on FOX, the networks for the other races has not been added at this time.. Speaks volumes, it does show that Twins, and speed weeks, practice and quals along with trucks would be on the new channel..

"NASCAR has shifted from being a television-driven company to one clearly centered around the marketing of the sport. How that gets fans back in the stands or more passing on the track is yet to be seen."

JD, you already know this, but the fact is - it doesn't.

Everyone at NASCAR and the various media, including the drivers can "market" to me but they have jumped the shark. I want to see racing and I don't see it on TV OR at the track. I am no longer a believer.

Just think we will now have 10 years of Fox covering Nascar, 10 more years.

One thing I think Nascar figures is most all the fans have iPads, fancy cell phones, etc. That they can get any channel on Tv they want, they have super internet connections so they can watch live video and fancy computers to handle these feeds. That we will pay any extra cost to watch Nascar.

For me this is not true. I only have so much money and if I have to upgrade or pay extra to watch Nascar I just can't afford it.

Adjusted for inflation, this comes out to an increase of only 5% over the current contract. Since 2001 we have seen an inflation increase of 30.2%. Considering the fact the contract is through 2022, and assuming we will have some inflation in future years, NASCAR will actually be getting significantly less real money in 2022 than they were getting in 2001, or even today.

Now that the Fox deal with Nascar is done, the question is what Nascar programming will be on Fox Sports 1 when Speed becomes FOx Sports 1. I think that the truck series will be on Fox Sports 1 as well as the All-Star race. I don't think that qualifying and practice will be on Fox Sports 1 for races that Fox doesnt have. It will be interesting to see where TNT and ESPN stand when they start their Nascar negotiations. While JD believes that the TNT races will become FOX races, I have heard that TNT wants more races. It will be interesting to see what happens with TNT after Turner sold Nascar back its digital rights. I see ESPN staying the way it is.

A point on SiriusXM's NASCAR channel: It is a nonstop NASCAR commercial. Sorry, but if you go on there and question the sport you get laughed off the air. If it's a small issue like the Top 35 you get some traction but heaven forbid you question how NASCAR runs a race or runs the sport. Kernan had a loose format show and that got kicked off the air since he let the fans actually TALK about things, fly black helicopters and have real conversation about anything which didn't play well with the big wigs.

Moody used to be pretty solid, but from 2006 to now I have heard the change to much more pro-NASCAR rhetoric which is sad. I get we can't bash the sport 24/7 but go listen to NFL radio. Every show on there has real conversation about the sport. Positive and negative. It sounds more fair and balanced there than it does with NASCAR. My 2 cents on the topic anyways.

I do find the inflation comment interesting. I also believe those numbers are probably pretty close. Should be VERY interesting to hear how the next round of negotiations go with Turner and ESPN.

@the loose wheel - you describe why I didn't renew my Sirius radio subscription when it expired 3 years ago. IMO, they stopped covering the sport in a fair manner. As JD mentioned, I understand that people have to play the game they way their employers instruct, BUT since this was "pay for" radio for me, I figured that if I didn't like what they were selling, I could choose not to buy, which is what I've done.

Gina, if NASCAR were the only reason I had satellite then I would have dropped it years ago. Fortunately between the NFL games and a few music channels I really enjoy I barely stop on NASCAR Radio unless there is a race going on and I am in the car. I find myself unable to listen to a show for longer than 5 minutes because it seems to be a repetitive pattern of what gets discussed and what gets made fun of

I'm really shocked at the money being tossed to France. The networks must still be making money despite falling ratings. But I can see the fan being inundated with even more commercials in order for these networks to pay for this silly contract. As it was this season, I did a count during a lot of races and discovered that fans would see, on average, 5 to 9 laps and then miss anywhere from 8 to 12 laps for commercials. I can see that second set of numbers increase.

OK, with that said, is there revenue sharing in Nascar? I'm guessing not, and if that's the case, why aren't owners staging protests to get some of that cash out of France's grubby hands? Why can't some of that cash go to money/sponsor strapped poor teams? I'm really beginning to feel that these owners need to get together and go after this greedy person and get some monetary relief, especially the small budget teams. After all, France does absolutely nothing to deserve that kind of cash.

Darcie,A percentage of TV money goes to the tracks. In fact, tracks make more money via TV than tickets.

My opinion is that there won't be any more commercials during the over the air race, but FOX will make the additional rights fees back with on-line ads, and selling ads for their web pages with NASCAR content.

This contract was the perfect opportunity for NASCAR to deal with some fan complaints, and they appear to have thrown it away. As part of the new contract, NASCAR could have required that no announcer, commentator, producer, or director can have a financial relationship with a manufacturer, team, or primary sponsor. I understand a little favoritism on regional broadcasts for stick and ball sports, but every NASCAR broadcast is a national broadcast where all fans deserve impartial presentation.

They could have also limited the number of commercial minutes per hour by terms of the contract. Today's fans seem to be at the limit for commercial tolerance. If Fox overpaid as some suggest, they will have incentive to load the broadcasts with commercials; and that will drive more fans away.

NASCAR could also have put limitiations on the number of uses/and or minutes of use of specialty cameras such as bumper cams, roof cams, driver cams, etc. etc. This could greatly reduce the worst tendencies of the producers and directors with ADD and forced them to concentrate on the big picture that the fans want.

Rather than deal with issues such as these, NASCAR followed its normal strategy of maximizing its immediate financial gain at the expense of the long term health of the sport. All money that NASCAR collects ultimately comes from the fans, either directly from fans or indirectly through advertisers who want access to the fans. NASCAR has already had ample warning of what the TV partners can do to cause erosion of the fan base, and they appear to have ignored the warning.

I sometimes wonder how many NASCAR management employees actually watch races on TV. I also wonder how many actually enjoy auto racing. It appears that they consider NASCAR as just another job and simply view NASCAR racing as a product to be sold to consumers like any other widget. Some businesses operate under the motto "The customer is always right." NASCAR seems to operate under the theory that the customers are ignorant and will accept anything they dish out. NASCAR does this at the risk of further erosion of the fan base and the long term health of the sport.

John, one shining counterexample to the RaceDay scenario is the fact that ESPN's premier college football studio show College GameDay often goes live to the site of games that ESPN isn't even carrying. For example, today they did College GameDay live from South Carolina @ Florida, a game that CBS is carrying.

If ESPN can do something like this, surely Fox Sports 1 could do the same for NASCAR.

This just goes to show you that NASCAR is a corrupt culture. No one in NASCAR has the balls to stand up to Brian France and tell him what he is doing is wrong. Someone should call BZF out on his incompetence and stick to his/her guns.

Matt McLaughlin wrote an article on frontstretch a few months ago. The title:Critical mass, is it too late to save NASCAR?

Well, it could be one of the two Fox Soccer channels that goes away instead of Speed. With NBC Sports Network not just wanting F1 and INDYCAR for motorsport, they have just acquired soccer's biggest league (Barclays Premier League), so it could be Fox Soccer Plus that goes away in order to do Fox Sports One.